In re GOOGLE REFERRER HEADER PRIVACY LITIGATION, No. 5:2010cv04809 - Document 85 (N.D. Cal. 2015)

Court Description: ORDER granting 65 Motion for Final Approval of Class Action Settlement; granting 66 Motion for Attorney Fees, Costs and Incentive Awards. The Clerk shall close this file upon entry of Judgment. Signed by Judge Edward J. Davila on 3/31/2015. (ejdlc1S, COURT STAFF) (Filed on 3/31/2015)
Subsequent History
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 IN RE GOOGLE REFERRER HEADER PRIVACY LITIGATION Case No. 5:10-cv-04809-EJD 10 ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 11 Re: Dkt. Nos. 65, 66 United States District Court Northern District of California 9 This consolidated internet privacy litigation against Defendant Google Inc. (“Google”) 12 13 returns for final approval of a class action settlement. See Docket Item No. 65. Representative 14 Plaintiffs Paloma Gaos, Anthony Italiano and Gabriel Priyev (“Plaintiffs”) also seek an order 15 approving their request for attorneys fees, costs and incentive awards. See Docket Item No. 66. Federal jurisdiction arises pursuant to 28 U.S.C. § 1331. Having carefully considered the 16 17 written briefing along with the arguments of counsel at the hearing on this matter, the court has 18 determined the motions should be granted for the reasons explained below. 19 I. FACTUAL AND PROCEDURAL BACKGROUND The court previously described the factual allegations underlying this lawsuit and repeats 20 21 them again here. According to the Consolidated Class Action Complaint (“CCAC”), “searching” 22 is one of the “most basic activities performed in the Internet,” and Google’s website offers “the 23 most-used search engine in the world.” See CCAC, Docket Item No. 50, at ¶¶ 15, 16. This case 24 focuses on that proprietary search engine. Plaintiffs allege Google operated its search engine in a 25 manner that violated their Internet privacy rights by disclosing personal information to third 26 parties. 27 1 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 Specifically, Plaintiffs allege that Google’s search engine intentionally and by default 2 included the user’s search terms in the resulting URL of the search results page. Id. at ¶ 56. Thus, 3 when a user of Google’s search engine clicked on a link from the search results page, the owner of 4 the website subject to the click receives the user’s search terms in the “referrer header” from 5 Google. Id. at ¶ 57. This information is then disseminated further, since several web analytics 6 services parse search query information from web server logs, or otherwise collect the search 7 query from the referrer header transmitted by each user’s web browser. Id. at ¶ 58. Indeed, 8 Google’s own analytics product provides webmasters with this information in the aggregate. Id. 9 According to Plaintiffs, the problem with Google’s disclosure of users’ search information to the third parties is that the referrer header - which displays the user’s search terms - can 11 United States District Court Northern District of California 10 sometimes contain certain personal information often subject to search queries, including “users’ 12 real names, street addresses, phone numbers, credit card numbers, social security numbers, 13 financial account numbers and more, all of which increases the risk of identity theft.” Id. at ¶ 3. 14 “User search queries can also contain highly-personal and sensitive issues, such as confidential 15 medical information, racial or ethnic origins, political or religious beliefs or sexuality, which are 16 often tied to the user’s personal information. Id. at ¶ 3. 17 Based on these allegations, Plaintiffs assert the following causes of action against Google: 18 (1) violation of the Stored Communications Act (“SCA”), 18 U.S.C. § 2701; (2) breach of 19 contract; (3) breach of the covenant of good faith and fair dealing; (4) breach of implied contract; 20 (5) unjust enrichment; and (6) declaratory and injunctive relief. 21 Gaos initiated an action in this court on October 25, 2010, and Priyev filed an action on 22 February 29, 2012, in the Northern District of Illinois. On April 30, 2013, the cases were 23 consolidated after the Priyev action was transferred to this court. On March 26, 2014, the court 24 granted the parties motion for preliminary approval of the settlement, certified a settlement class 25 and appointed counsel. These motions were filed upon completion of the notice plan. 26 27 28 The court received four written objections to the settlement from Kim Morrison, David 2 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 1 Weiner, Melissa Holyoak, Theodore H. Frank, and Cameron Jan. A hearing addressing final 2 approval was held on August 29, 2014. 3 II. LEGAL STANDARD A class action may not be settled without court approval. Fed. R. Civ. P. 23(e). When the 4 5 parties to a putative class action reach a settlement agreement prior to class certification, “courts 6 must peruse the proposed compromise to ratify both the propriety of the certification and the 7 fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). “Approval under 23(e) involves a two-step process in which the Court first determines 8 whether a proposed class action settlement deserves preliminary approval and then, after notice is 10 given to class members, whether final approval is warranted.” Nat’l Rural Telecomms. Coop. v. 11 United States District Court Northern District of California 9 DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). At the final approval stage, the primary 12 inquiry is whether the proposed settlement “is fundamentally fair, adequate, and reasonable.” 13 Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Having already completed an 14 preliminary examination of the agreement, the court reviews it again, mindful that the law favors 15 the compromise and settlement of class action suits. See, e.g., Churchill Village, LLC. v. Gen. 16 Elec., 361 F.3d 566, 576 (9th Cir. 2004); Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 17 (9th Cir. 1992); Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 625 (9th Cir. 1982). 18 Ultimately, “the decision to approve or reject a settlement is committed to the sound discretion of 19 the trial judge because he is exposed to the litigants and their strategies, positions, and proof.” 20 Hanlon, 150 F.3d at 1026. 21 III. DISCUSSION 22 A. 23 This analysis begins with an examination of whether class treatment remains appropriate. Continuing Certification of Settlement Class 24 The court found at the preliminary approval stage that Rule 23(a)’s requirements of numerosity, 25 commonality, typicality, and adequate protection by the named representatives were satisfied. As 26 to those issues, Plaintiffs anticipated a class comprised of approximately 129 million individuals 27 3 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 who all share a common injury. The existence of this injury for each class member could be 2 determined by resolving one question: whether Google’s system-wide practice and policy of 3 storage and disclosure of their search query information was unlawful. Plaintiffs’ claims were 4 also typical, if not identical, to that of other class members. For that reason, there was no 5 indication that Plaintiffs’ interest would conflict with that of the class, and Plaintiffs and their 6 counsel had proven a desire to vigorously pursue class claims as evidenced by prior motion 7 practice. 8 9 As to Rule 23(b), the court found that common questions predominate and that the class action mechanism was a superior process for this litigation. The alternatives to class certification millions of separate, individual and time-consuming proceedings or a complete abandonment of 11 United States District Court Northern District of California 10 claims by a majority of class members - were not preferable. Moreover, class treatment was 12 appropriate because Defendant’s policy was directed at all of its users as whole rather than at 13 particular users of its search engine. Since an adequate showing was made as to all of the Rule 23 14 factors, the court conditionally certified the class for settlement purposes. 15 The filings related to this motion do not compel an alteration to the prior findings under 16 Rule 23. Although Objectors Frank and Holyoak argue the class should be decertified unless the 17 class members receive direct payments from the settlement fund, such an argument is 18 unpersuasive under these circumstances. Frank and Holyoak appear to generally contend that the 19 only acceptable benefit is some form of monetary compensation. If it is too costly to distribute 20 settlement funds to class members, then Frank and Holyoak believe the class action mechanism is 21 an inferior method of resolution under Rule 23(b). 22 This argument directed at the superiority element of Rule 23(b) is misplaced. Within the 23 context of a class action settlement, the superiority inquiry focuses on “whether the objectives of 24 the particular class action procedure will be achieved in the particular case.” Hanlon, 150 F.3d at 25 1023. Here, the primary objective of the class action procedure - to enable litigation where it 26 would otherwise be economically infeasible - is achieved in this case. Deposit Guar. Nat’l Bank 27 4 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 v. Roper, 445 U.S. 326, 339 (1980) (“Where it is not economically feasible to obtain relief within 2 the traditional framework of a multiplicity of small individual suits for damages, aggrieved 3 persons may be without any effective redress unless they may employ the class-action device.”). 4 As noted, the alternatives to a class action are not preferable since they involve either thousands of 5 individual cases or a complete abandonment of millions of claims. Hanlon, 150 F.3d at 1023 6 (holding that a superiority determination “necessarily involves a comparative evaluation of 7 alternative mechanisms of dispute resolution.”). 8 9 Moreover, a class-wide resolution is not rendered inferior simply because the settlement agreement calls for an indirect rather than a direct benefit to the class. Assuming the circumstances support it, a settlement calling for a cy pres remedy can be approved. See Nachshin 11 United States District Court Northern District of California 10 v. AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011) (recognizing that federal courts frequently use 12 the cy pres doctrine where proof of individual claims would be overly-burdensome or distribution 13 of damages too costly.); see also Lane v. Facebook, Inc., 696 F.3d 811, 826 (9th Cir. 2012) 14 (affirming approval of class action settlement providing for $6.5 million distribution of funds to cy 15 pres recipients where direct monetary payments to class members would be de minimis). This 16 case is distinguishable from the one relied upon by Frank and Holyoak, In re Hotel Telephone 17 Charges, 500 F.2d 86 (9th Cir. 1974), because, while the Court discussed the issue of de minimis 18 recovery versus extraordinary costs of administration, the possibility of a cy pres distribution in 19 place of direct payments to the class was not considered. 20 21 Accordingly, the objection of Frank of Holyoak on this topic is overruled. The class shall remain certified for settlement purposes. 22 B. 23 Rule 23(c)(2)(B) requires “the best notice that is practicable under the circumstances, 24 including individual notice to all members who can be identified through reasonable effort.” 25 However, individual notice is not always practical. When that is the case, publication or some 26 similar mechanism can be sufficient to provide notice to the individuals that will be bound by the 27 5 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 Appropriateness of the Notice Plan 1 class action judgment. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 315 (1950). 2 On the issue of appropriate notice, the court previously recognized the uniqueness of the 3 class asserted in this case, since it could potentially cover most internet users in the United States. 4 On that ground, the court approved the proposed notice plan involving four media channels: (1) 5 internet-based notice using paid banner ads targeted at potential class members (in English and in 6 Spanish on Spanish-language websites); (2) notice via “earned media” or, in other words, through 7 articles in the press; (3) a website decided solely to the settlement (in English and Spanish 8 versions); and (4) a toll-free telephone number where class members can obtain additional 9 information and request a class notice. In addition, the court approved the content and appearance 10 United States District Court Northern District of California 11 12 of the class notice and related forms as consistent with Rule 23(c)(2)(B). The court again finds that the notice plan and class notices are consistent with Rule 23, and that the plan has been fully and properly implemented by the parties and the class administrator. 13 C. 14 The court now reexamines the fairness of the proposed settlement, this time with the Fairness of the Settlement 15 benefit of notice having been provided to the class. The settlement agreement contains the 16 following major components: 17 Google will pay a total amount of $8.5 million, which will constitute the entirety of the 18 settlement fund. All payments will be made from this fund, including: (1) distributions 19 to cy pres recipients, (2) attorneys fees and costs awards, (3) incentive awards to named 20 plaintiffs, and (4) administration costs, including the costs due to the claims 21 administrator. Funds that remain after all payments are made will not revert to Google. 22 Google will maintain information on its website under the “FAQ,” “Key Terms,” and 23 “Privacy FAQ for Google Web History” webpages which discloses how information 24 concerning users’ search queries are shared with third parties. Specifically, the “FAQ” 25 webpage will include an answer to the question “Are my search queries sent to 26 websites when I click on Google Search results?” which notifies users that search terms 27 28 6 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 1 may be disclosed to the destination webpage in the referrer header. In conjunction, the 2 “Key Terms” webpage will include a definition of “HTTP Referrer,” and the “Privacy 3 FAQ for Google Web History” webpage will direct users to the Privacy Policy FAQ 4 for more information on how Google handles search queries generally. Importantly, 5 however, Google is not required to make changes to its homepage,, 6 or to practices or functionality of Google Search, Google AdWords, Google Analytics 7 or Google Web History. 8 As to particular payments to be made from the settlement fund, Plaintiffs request that each of the three representative plaintiffs receive incentive awards $5,000, and 9 anticipate up to $1 million in claims administration costs. They also request the court 11 United States District Court Northern District of California 10 approve their counsel’s request for $2.125 million in fees and $21,643.16 in costs. 12 After all contemplated payments are made from the fund, the balance will be 13 distributed to the cy pres recipients previously approved by the court. To that end, 14 Plaintiffs propose that Carnegie Mellon University receive 21% of the remainder, that 15 the World Privacy Forum receive 17%, that Chicago-Kent College of Law Center for 16 Information, Society and Policy receive 16%, that the Stanford Center for Internet and 17 Society receive 16%, that the Berkman Center for Internet and Society at Harvard 18 University receive 15%, and that the AARP Foundation receive 15%. 19 To determine whether a class action settlement is fair, adequate and reasonable, the court 20 must balance a series of factors, including “the strength of the plaintiffs’ case; the risk, expense, 21 complexity, and likely duration of further litigation; the risk of maintaining class action status 22 throughout the trial; the amount offered in settlement; the extent of discovery completed and the 23 stage of the proceedings; the experience and views of counsel; the presence of a governmental 24 participant; and the reaction of the class members to the proposed settlement.” Hanlon, 150 F.3d 25 at 1026. “It is the settlement taken as a whole, rather than the individual component parts, that 26 must be examined for overall fairness.” Id. 27 7 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 When, as here, settlement occurs before formal class certification, approval requires a 2 higher standard of fairness in order to ensure that class representatives and their counsel do not 3 secure a disproportionate benefit at the expense of the class. Lane, 696 F.3d at 819. 4 5 i. Strength of Plaintiffs’ Case To assess strength of the case, “the district court’s determination is nothing more than an amalgam of delicate balancing, gross approximations and rough justice.” Officers for Justice, 688 7 F.2d at 625 (internal quotations omitted). There is no “particular formula by which that outcome 8 must be tested,” (Rodriguez v. West Publ’g Corp., 563 F.3d 948, 965 (9th Cir. 2009)), and the 9 district court is not required to render specific findings on the strength of all claims. Lane, 696 10 F.3d at 823. Instead, the court may “presume that through negotiation, the Parties, counsel, and 11 United States District Court Northern District of California 6 mediator arrived at a reasonable range of settlement by considering Plaintiff’s likelihood of 12 recovery.” Garner v. State Farm Mutual Auto. Ins. Co., No. 08-CV-1365-CW, 2010 U.S. Dist. 13 LEXIS 49477, at *24, 2010 WL 1687832 (N.D. Cal. April 22, 2010). 14 Here, Plaintiffs readily state that the alleged privacy violation underlying all of their claims 15 is novel and was potentially one of first impression in this circuit. Thus, from the outset, there was 16 no guarantee that any claims would survive pre-trial challenges if adversarial litigation had 17 continued. Indeed, by the time the parties reached a settlement, some of the claims were facing a 18 third motion to dismiss and the one claim that had survived the second dismissal motion, the SCA 19 claim, was subsequently invalidated by the Ninth Circuit in a case presenting a similar theory. See 20 In re Zynga Privacy Litig., 750 F.3d 1098, 1107 (9th Cir. 2014) (rejecting a claim under the SCA 21 based on webpage disclosures in a referrer header). 22 Plaintiff also faced challenges had the case proceeded to trial. In light of the technology 23 involved, the the jury would have been required to review complex technical evidence about the 24 inner-workings of Google’s search engine, leaving significant opportunity for misunderstanding. 25 Furthermore, success at trial would not have equated to an ultimate success for the class. This is 26 because the calculation of damages based on a potentially unquantifiable privacy injury would 27 8 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 have posed a serious challenge to Plaintiffs in obtaining some type of valuable relief, and any 2 meaningful monetary amount awarded to each class member would have resulted in an 3 astronomical judgment far exceeding the value of Google, given the size of the class. For that 4 reason, the judgment would undoubtedly have been met with a remittitur motion and an appeal. 5 This factor weighs strongly in favor of the settlement. Without a compromise, there was 6 7 8 little guarantee of any benefit to the class without a substantial amount of further litigation. ii. The Risk, Expense, Complexity, and Likely Duration of Further Litigation This case was a particularly risky one for counsel because the type of privacy injury asserted by Plaintiffs renders it legally unproven, technically complex and potentially of little 10 value. It also would have been expensive to litigate and try since expert testimony would be 11 United States District Court Northern District of California 9 necessary to explain the referrer header technology and establish a basis for damages in an 12 untested area. 13 Moreover, Google’s denial of liability means Plaintiffs would continue to face “serious 14 hurdles,” including a motion for summary judgment, Daubert challenges, and inevitable appeals 15 that would “likely prolong the litigation, and any recovery by class members, for years.” 16 Rodriguez, 563 F.3d at 966. Because a negotiated resolution provides for a certain recovery in the 17 face of an uncertain legal theory, this factor favors the settlement. Curtis-Bauer v. Morgan Stanley 18 & Co., Inc., No. 06-C-3903 TEH, 2008 U.S. Dist. LEXIS 85028, at *13, 2008 WL 4667090 (N.D. 19 Cal. Oct. 22, 2008) (“Settlement avoids the complexity, delay, risk and expense of continuing with 20 the litigation and will produce a prompt, certain, and substantial recovery for the Plaintiff class.”). 21 22 iii. The Risk of Maintaining Class Action Status Although a class can be certified for settlement purposes, the notion that a district court 23 could decertify a class at any time is an inescapable and weighty risk that weighs in favor of a 24 settlement. See Rodriguez, 563 F.3d at 966 (citing Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 25 160 (1982)). Here, there is little doubt that Google would have vigorously opposed class 26 certification at every opportunity before the district and appellate courts. In addition, the sheer 27 9 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 size of the class - essentially covering all persons in the United States who submitted a search 2 query to Google for a period of years - all but invites challenges to class certification based on 3 overbreadth or management difficulties, some of which could be considered meritorious. Thus, 4 the very real risk of never obtaining or losing class status in the absence of settlement weighs in 5 favor of approval. 6 7 iv. The Amount Offered in Settlement This settlement has a monetary component requiring Google to pay $8.5 million into a 8 common fund and an injunctive component obligating certain disclosures on the Google website. 9 After court-approved payments, the remainder of the fund will be distributed to identified cy pres 10 United States District Court Northern District of California 11 recipients in proportions designated by Plaintiffs’ counsel. In support of final approval, Plaintiffs point out that the amount of the agreed-upon 12 settlement fund compares favorably to that of other similar class actions. See, e.g., In re Google 13 Buzz Privacy Litig., 2011 WL 7460099, at *3-4 (N.D. Cal. June 2, 2011) (approving $8.5 million 14 settlement fund for unauthorized disclosure of email contact lists; Lane, 696 F.3d at 818 15 (approving $9.5 million settlement fund for unauthorized disclosure of online behavior); In re 16 Netflix Privacy Litig., No. 5:11-CV-00379 EJD, 2013 U.S. Dist. LEXIS 372862013, at *16-18, 17 WL 1120801 (N.D. Cal. March 18, 2013) (approving $ 9 million settlement fund for unauthorized 18 storage of personal information). This comparison is instructive because, like those cases, the 19 potential value of this case far exceeds that of the settlement fund. But also like those cases, a 20 theoretical value in the trillions of dollars does not preclude approval here since a fund of $8.5 21 million is significant given the substantial legal obstacles to a recovery through litigation. 22 Plaintiffs also believe that a distribution of the settlement funds to cy pres recipients is 23 appropriate in this case. Cy pres payments like those proposed for this case can be approved when 24 actual funds are “non-distributable,” or “‘where the proof of individual claims would be 25 burdensome or distribution of damages costly.’” Nachshin, 663 F.3d at 1038 (quoting Six 26 Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1305 (9th Cir. 1990)). But due to a 27 10 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 heightened potential for collusion at the expense of absent class members, this form of settlement 2 must be examined to ensure it is the “next best” remedy to direct payments to the class. See id.; 3 see also Lane, 696 F.3d at 819 (holding that a class settlement should not be approved unless it 4 was evaluated “to account for the possibility that class representatives and their counsel have 5 sacrificed the interests of absent class members for their own benefit.”). A district court should 6 not approve a cy pres distribution “unless it bears a substantial nexus to the interests of the class 7 members” such that it accounts for the nature of the lawsuit, the objectives of the underlying 8 statutes, and the interests of the non-appearing class members. Lane, 696 F.3d at 821. On this issue, the court echoes the comments it made at preliminary approval describing 10 why a cy pres remedy is the “next best” result here. First, the settlement fund, while sizeable, is 11 United States District Court Northern District of California 9 “non-distributable.” Since the amount of potential class members exceeds one hundred million 12 individuals, requiring proofs of claim from this many people would undeniably impose a 13 significant burden to distribute, review and then verify. Similarly, the cost of sending out very 14 small payments to millions of class members would exceed the total monetary benefit obtained by 15 the class. 16 Second, the cy pres distribution accounts for the nature of this suit, meets the objectives of 17 the SCA, and furthers the interests of class members. The recipients are established organizations 18 chosen by Plaintiffs’ counsel after considering whether they are independent and free from 19 conflict, have a record of promoting privacy protection on the Internet, reach and target interests 20 of all demographics across the country, were willing to provide detailed proposals, and are capable 21 of using the funds to educate the class about online privacy risks.1 Having carefully reviewed the 22 23 24 25 26 27 28 1 Some of the proposed cy pres recipients are “usual suspects,” or organizations that routinely receive distributions from class action settlements. At the two approval hearings held in this case, the court expressed a concern with using the same list of cy pres recipients in every internet privacy class action and observed that this practice discourages the development of other worthy organizations. This practice also raises questions about the effectiveness of those organizations that have received prior distributions. The court was somewhat surprised at the final list of distributees, since Plaintiffs’ counsel suggested the selection process would potentially cast a wider net. See Tr. of Proceedings on Aug. 23, 2013, Docket Item No. 57, at p. 14:25-15:4 (“We 11 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 1 proposals submitted by counsel, the court is satisfied that the proposed cy pres distribution “bears 2 a substantial nexus to the interests of the class members,” as required by the Ninth Circuit. Id. at 3 821. 4 Aside from the cy pres portion of the settlement, the court must also comment on the fact 5 that Google’s allegedly unlawful practice will not change as a result of this case. Instead, Google 6 will be obligated to make certain “agreed-upon disclosures,” or changes to certain portions of its 7 website, the purpose of which is to better inform users how their search terms could be disclosed 8 to third parties through a referrer header. It was noted previously that this relief is not the best 9 result when compared to that sought in the CCAC, since the order contemplated by that pleading 10 United States District Court Northern District of California 11 would have required Google to stop disclosing search queries altogether. At the same time, a class action settlement does not need to embody the best possible result 12 to be approved. The court’s role is not to advocate for any particular relief, but instead to 13 determine whether the settlement terms fall within a reasonable range of possible settlements, 14 giving “proper deference to the private consensual decision of the parties” to reach an agreement 15 rather than to continue litigating. Hanlon, 150 F.3d at 1027; see also In re Tableware Antitrust 16 Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007). Considering all of the circumstances which 17 led to a compromise here, the relief obtained for the class falls within a reasonable range of 18 possible settlements since it was entirely possible that nothing would be obtained if the case were 19 to proceed further. Under the terms of the parties’ agreement, and contrary to what the objectors 20 21 22 23 24 25 26 27 28 are raising the bar, and I think raising the bar for all cy pres settlements like this to follow. We’re treating the cy pres allocation more like a grant making organization would treat grant prospective grant recipients.”). Despite this concern, the court recognizes that failure to diversify the list of distributees is not a basis to reject the settlement, particularly when the proposed recipients otherwise qualify under the applicable standard. See Lane, 696 F.3d at 820-21 (“We do not require . . . that settling parties select a cy pres recipient that the court or class members would find ideal . . . . such an intrusion into the private parties’ negotiations would be improper and disruptive to the settlement process.”). However, if class action counsel truly seeks to raise the bar for cy pres settlements, they should consider contributing to organizations other than the same typical few. 12 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 1 argue, future users of Google’s website will receive something from the injunctive relief: the 2 capability to better understand Google’s disclosure practices before conducting a search on its 3 website, and the ability to make a better informed choice based on that information. 4 5 6 In sum, this factor favors settlement. v. The Extent of Discovery Completed and the Stage of the Proceedings Prior to reaching a settlement, the parties had engaged in extensive document exchange 7 and had fully briefed three motions to dismiss. They also met in person numerous times and 8 engaged an experienced neutral to assist them in reaching a negotiated resolution. The extent of 9 Plaintiffs’ counsel factual investigation and the amount of pre-compromise litigation shows they “had a good grasp on the merits of their case before settlement talks began.” Rodriguez, 563 F.3d 11 United States District Court Northern District of California 10 at 967. As such, this factor weighs in favor of the settlement. 12 13 vi. The Experience and Views of Counsel “Parties represented by competent counsel are better positioned than courts to produce a 14 settlement that fairly reflects each party’s expected outcome in litigation.” Id. Consequently, 15 “‘[t]he recommendations of plaintiffs’ counsel should be given a presumption of reasonableness.’” 16 In re Omnivision Techns., Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2009) (quoting Boyd v. 17 Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979)). Given the extensive experience of 18 Plaintiffs’ counsel with complex class action lawsuits of a similar size to the instant case, this 19 factor favors approval of the settlement. 20 vii. The Presence of a Governmental Participant 21 The Class Action Fairness Act, or “CAFA,” requires that notice of a settlement be given to 22 state and federal officials and provides those officials a window of time to comment. 28 U.S.C. § 23 1715(b). “Although CAFA does not create an affirmative duty for either state or federal officials 24 to take any action in response to a class action settlement, CAFA presumes that, once put on 25 notice, state or federal officials will raise any concerns that they may have during the normal 26 course of the class action settlement procedures.” Garner, 2010 U.S. Dist. LEXIS 49477, at *37. 27 13 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 Here, the Class Administrator complied with the CAFA notice requirement on August 8, 2013. 2 No objections from a government official have been received. Thus, this factor favors the 3 settlement. 4 viii. The Reaction of Class Members A low number of opt-outs and objections in comparison to class size is typically a factor 5 6 that supports settlement approval. See Hanlon, 150 F.3d at 1027 (“[T]he fact that the 7 overwhelming majority of the class willingly approved the offer and stayed in the class presents at 8 least some objective positive commentary as to its fairness.”); see also Nat’l Rural Telecomms. 9 Coop., 221 F.R.D. at 529 (“It is established that the absence of a large number of objections to a proposed class action settlement raises a strong presumption that the terms of a proposed class 11 United States District Court Northern District of California 10 settlement action are favorable to the class members.”). Here, out of a class of more than 100 12 million individuals, the Class Administrator received thirteen requests for exclusion and four 13 written objections from five class members. These low rates of exclusion and objection can be 14 characterized as, at most, a favorable reaction by the class, or at least, as an absence of an 15 overwhelming negative reaction. This factor does weigh in favor of approval, albeit without 16 significant force. In sum, all of the applicable factors weigh in favor of finally approving the settlement. 17 18 IV. ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 19 When attorneys fees and costs are requested by counsel for the class, “courts have an 20 independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the 21 parties have already agreed to an amount.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 22 935, 941 (9th Cir. 2011). 23 “Where a settlement produces a common fund for the benefit of the entire class, courts 24 have discretion to employ either the lodestar method or the percentage-of-recovery method.” Id. 25 at 942. The former method is routinely used when “the relief sought - and obtained - is often 26 primarily injunctive in nature and thus not easily monetized.” Id. The figure is calculated “by 27 14 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 multiplying the number of hours the prevailing party reasonably expended on the litigation (as 2 supported by adequate documentation) by a reasonable hourly rate for the region and for the 3 experience of the lawyer.” Id. The court can “adjust [the figure] upward or downward by an 4 appropriate positive or negative multiplier reflecting a host of ‘reasonableness’ factors, including 5 the quality of representation, the benefit obtained for the class, the complexity and novelty of the 6 issues presented, and the risk of nonpayment.” Id. at 941-42 (internal quotations omitted). 7 “Foremost among these considerations, however, is the benefit obtained for the class.” Id. at 942. 8 Under the latter method, the court awards as fees a percentage of the common fund in lieu of the lodestar amount. Id. “[C]ourts typically calculate 25% of the fund as the ‘benchmark’ for a 10 reasonable fee award, providing adequate explanation in the record of any ‘special circumstances’ 11 United States District Court Northern District of California 9 justifying a departure.” Id. Relevant factors to a determination of the percentage ultimately 12 awarded include: “(1) the results achieved; (2) the risk of litigation; (3) the skill required and 13 quality of work; (4) the contingent nature of the fee and the financial burden carried by the 14 plaintiffs; and (5) awards made in similar cases.” Tarlecki v. bebe Stores, Inc., No. C 05-1777 15 MHP, 2009 U.S. Dist. LEXIS 102531, at *10, 2009 WL 3720872 (N.D. Cal. Nov. 3, 2009). 16 17 “Though courts have discretion to choose which calculation method they use, their discretion must be exercised so as to achieve a reasonable result.” Id. 18 A. 19 Plaintiffs’ counsel seek a fee award of $2.125 million, which is equal to 25% of the Percentage of the Fund 20 settlement fund. According to counsel, the combination of monetary distrubtions and injunctive 21 relief obtained in the settlement is an excellent result for the class because they “work in concert . . 22 . reshape the landscape of Internet privacy protections” and “enact a regime of informed consent 23 for Google Search users, who can now access complete and truthful information about the ways 24 Google handles user search queries before deciding whether to use Google Search, Google 25 Encrypted Search, or a competing search engine.” 26 27 28 Plaintiffs’ counsel also believe they undertook substantial risk by agreeing to litigate this 15 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 1 case on a purely contingent basis given the unsettled legal issues, and, for that reason, spent 2 considerable time and money with no guarantee of payment. In addition, they assert the novel 3 nature of this case coupled with an opponent armed with substantial defenses and resources 4 required sophisticated litigation and negotiation skills. Finally, counsel points out that the award 5 requested is consistent with that awarded in other similar cases. 6 Having considered the relevant factors, the court agrees with Plaintiffs’ counsel that this action posed a substantial risk and required significant time and skill to obtain a result for the 8 class. This case was not one where settlement was easily secured; to the contrary, Plaintiffs’ 9 counsel was required to defend their claims against three motions to dismiss. An agreement only 10 materialized after extensive in-person negotiations, first without and then including a professional 11 United States District Court Northern District of California 7 neutral. Moreover, counsel’s request is not disproportionate to the class benefit and is comparable 12 to awards approved in other similar internet privacy class actions, including one previously 13 approved by this court. See In re Netflix Privacy Litig., 2013 U.S. Dist. LEXIS 372862013, at 14 *29 (approving benchmark award of $2.25 million). Accordingly, a benchmark fee award of 15 amounting to 25% of the settlement fund is appropriate. 16 B. 17 The Ninth Circuit encourages district courts “to guard against an unreasonable result” by 18 cross-checking attorneys fees calculations against a second method. In re Bluetooth, 654 F.3d at 19 944. Since a 25% benchmark award might be reasonable in some cases but arbitrary in cases 20 involving an extremely large settlement fund, the purpose of the comparison is to ensure counsel 21 is not overcompensated. In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust 22 Litig., 103 F.3d 602, 607 (9th Cir. 1997). 23 Lodestar Comparison Here, Plaintiffs’ counsel calculates a lodestar figure of $966,598.75 for 2085.6 billing 24 hours from four law firms, to which they apply a 2.2 multiplier for a total amount of 25 $2,126,517.25. They also seek compensation for total costs of $21,643.16. These amounts are 26 attributable to each firm as follows: 27 16 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 2 3 4 5 6 7 Firm Aschenbrener Law, P.C. Fees $321,184.00 Expenses $5,844.54 Total Cost $327,028.54 Nassiri & Jung LLP $253,776.50 $4,464.95 $258,241.45 Progressive Law Group $331,967.25 $7,551.27 (+ $22.40) $339,540.92 Edelson PC $59,671.00 $3,760.00 $63,431.00 Totals $966,598.75 $21,643.16 $988,241.91 8 Among the participating law firms, the hourly rates charged by attorneys range from $300 10 to $685. The hourly rate for law clerks is $75, and for paralegals is $125. Altogether, the average 11 United States District Court Northern District of California 9 hourly rate for all work performed is $463. 12 Plaintiff’s counsel has provided sufficient support for its proposed lodestar calculation. 13 The amount of hours and other costs attributed to this case are reasonable in light of the efforts 14 required to litigate and ultimately engage in a lengthy settlement process. In addition, the hourly 15 rates charged fall within the range of those approved in other similar cases, and the suggested 16 lodestar multiplier of 2.2 is comparable to that previously permitted by other courts in similar 17 internet privacy cases. Accordingly, the lodestar cross-check confirms the reasonableness of the 18 percentage-based calculation. 19 C. 20 “[N]amed plaintiffs, as opposed to designated class members who are not named plaintiffs, Incentive Awards 21 are eligible for reasonable incentive payments.” Staton, 327 F.3d at 977. To determine the 22 appropriateness of incentive awards a district court should use “relevant factors includ[ing] the 23 actions the plaintiff has taken to protect the interests of the class, the degree to which the class has 24 benefitted from those actions . . . the amount of time and effort the plaintiff expended in pursuing 25 the litigation . . . and reasonabl[e] fear[s of] workplace retaliation.” Id. (internal quotation marks 26 omitted). 27 17 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 The Settlement Agreement provides that the named Plaintiffs may receive incentive 1 2 awards of up to $5,000 each. In this district, that amount is presumptively reasonable. Jacobs v. 3 Cal. State Auto. Ass’n Inter-Ins. Bureau, No. C 07-00362 MHP, 2009 U.S. Dist. LEXIS 101586, 4 at *13-14, 2009 WL 3562871 (N.D. Cal. Oct. 27, 2009). Since the named plaintiffs assumed the 5 responsibilities and burdens of acting as representatives in this lawsuit, including providing 6 documents, verifying allegations, and consulting with counsel, the court finds the incentive awards 7 reasonable in light of the eligibility factors set forth in Staton. 8 9 V. OBJECTIONS The court now addresses the points raised in the four written objections, keeping in mind that objectors to a class action settlement bear the burden of proving any assertions they raise 11 United States District Court Northern District of California 10 challenging the reasonableness of a class action settlement. United States v. Oregon, 913 F.2d 12 576, 581 (9th Cir. 1990). 13 The objectors have not satisfied this burden. To begin, all four objectors take issue with 14 the cy pres character of this settlement, or with cy pres settlements in general. These arguments 15 overlook both the law of this circuit which permits cy pres settlements such as this one, and the 16 indirect benefit provided by a cy pres settlements. See Lane, 696 F.3d at 819. In addition, the 17 court has explained why Plaintiffs made a sufficient showing that the cost of distributing this or 18 really any settlement fund to the class members would be prohibitive. 19 The objectors similarly argue that the size of the settlement fund is insufficient in 20 comparison to the value of the case, and believe that a fair settlement would have resulted in an 21 end to Google’s “unlawful” practices. This contention is misguided, however, because the 22 objectors do not account for the significant and potentially case-ending weakness in the SCA 23 claim brought about by the Ninth Circuit’s decision in Zynga Privacy Litigation. In light of this 24 development, whether or not Google’s practice of disclosing search queries can actually be 25 characterized as unlawful is questionable. In the end, the parties fashioned a settlement in 26 consideration of the favorable and unfavorable aspects of each side’s case. And it is the parties 27 18 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 themselves, as opposed to the court or the objectors, who are in the best position to assess whether 2 a settlement “fairly reflects” their “expected outcome in litigation.” In re Pac. Ents. Sec. Litig., 47 3 F.3d 373, 378 (9th Cir. 1995). Just because a settlement could be improved does not mean it is not 4 fair, reasonable or adequate. Hanlon, 150 F.3d at 1027. Here, there is no reason to believe the 5 settlement is inadequate when viewed against the diminished strength of the claims. Objectors also argue that the cy pres recipients are unrelated to the subject matter of this 6 7 case, and one claims there is a conflict of interest because some of the attorneys representing 8 Plaintiffs attended Harvard University. The court rejects these arguments. The chosen recipients 9 and their respective proposals are sufficiently related so as to warrant approval; they do not have to be the recipients that objectors or the court consider ideal. Lane, 696 F.3d at 820-21. 11 United States District Court Northern District of California 10 Additionally, while the potential for a conflict of interest is noted, there is no indication that 12 counsel’s allegiance to a particular alma mater factored into the selection process. Indeed, the 13 identity of potential cy pres recipients was a negotiated term included in the Settlement Agreement 14 and therefore not chosen solely by Harvard alumni. 15 Some objections challenge the notice plan or the contents of the notice and describe 16 alternative ways that notice could have been provided to the class. It may be true that other 17 methods of notice exist. But here, the court approved one specific plan that satisfied the standard 18 Rule 23(c)(2)(B) standard. Although the plan did not call for individual notice, that type of notice 19 is not required in all cases. See Mullane, 339 U.S. at 315. Finally, the objectors challenge the provisions of the Settlement Agreement which provide 20 21 for attorneys fees and incentive awards. The court does not agree that the fees and incentive 22 awards are inconsistent with the value of the class benefit, and notes that the approved amounts 23 are consistent with the relevant Ninth Circuit authority on this topic. For these reasons, the court is unpersuaded by the objections. They are each overruled. 24 25 VI. CONCLUSION AND ORDER 26 Based on the preceding discussion, the court finds that the terms of the settlement, 27 19 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS 28 1 including the awards of attorneys fees, costs, and incentive awards, is fair, adequate, and 2 reasonable; that it satisfies Federal Rule of Civil Procedure 23(e) and the fairness and adequacy 3 factors; and that it should be approved and implemented. 4 The Motion for Final Approval (Docket Item No. 65) and the Motion for Attorneys Fees 5 and Costs (Docket Item No. 66) are therefore GRANTED. The Clerk shall close this file upon 6 entry of Judgment. 7 8 9 10 IT IS SO ORDERED. Dated: March 31, 2015 ______________________________________ EDWARD J. DAVILA United States District Judge United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 Case No.: 5:10-cv-04809-EJD ORDER GRANTING MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT; GRANTING MOTION FOR ATTORNEYS FEES, COSTS AND INCENTIVE AWARDS